Money Quote that Would Make Reagan Laugh

“Cantor and Kyl just threw Boehner and McConnell under the bus. This move is an admission that there will be a need for revenues and Cantor and Kyl don’t want to be the ones to make that deal.” – unnamed Democratic aide

This is wishful spinning, actually. It’s not about Speaker Boehner it’s about Pres. Obama and 2012.

Mr. Cantor’s also not going to create an extra nightmare by alienating the Tea Partiers on some budget deal that admits we can’t do anything about the economic mess without revenues, aka raising taxes.

In his statement he said this: I believe it is time for the President to speak clearly and resolve the tax issue.

Republicans want Pres. Obama on the record saying he will raise taxes, betting that in the current climate Independents will go ballistic and bolt, though they won’t.

If only Democrats hadn’t caved on spending cuts calculating that by giving a little they would get a little. Worst negotiators ever, with a side of historical amnesia.

What Pres. Obama and the Democrats should do, in fact should have done last fall before Obama extended the Bush tax cuts he said he wouldn’t as a candidate, is make the case for revenue through tax increases, starting with the mil-billionaire class, though it’s not the only thing needed, as I’ve written many times before. The model is Rep. Jan Schakowsky’s Fairness in Taxation Act: $1-10 million: 45%; $10-20 million: 46%; $20-100 million: 47%; $100 million to $1 billion: 48%; $1 billion and over: 49%.

But heaven forbid Democratic “leaders” make the case for revenue and taxes. They don’t even have the gumption to invoke Ronald Reagan, who raised taxes over his political lifetime by double digits.

What Obama doesn’t know about Ronald Reagan’s shenanigans could fill a fairway.

[…] Over the next few years, Reagan came under the influence of Rep. Jack Kemp (R-NY), Wall Street Journal editorial writer Jude Wanniski, economist Arthur Laffer and other proponents of “supply-side economics.” While skeptical at first, in 1979 Reagan endorsed the Kemp-Roth tax bill, which would have cut statutory income tax rates by about 30 percent across the board. After winning the White House in 1980, Reagan sent the Kemp-Roth proposal to Congress and it was enacted in August 1981.

Almost immediately upon enactment of the 1981 tax cut, Reagan came under enormous pressure to do something about the federal budget deficit. While his preferred approach was to cut spending as much as necessary, it was not politically possible to so. His aides began pressuring him to support a tax increase. Conservative activists were appalled that Reagan would even consider such a thing, but he eventually endorsed the Tax Equity and Fiscal Responsibility Act of 1982. According to a Treasury Department analysis, it raised taxes by close to one percent of GDP, equivalent to $150 billion per year today, and was probably the largest peacetime tax increase in American history.[11]

This was just the first of many tax increases that President Reagan endorsed and signed into law. There were 11 major tax increases during his administration. And this doesn’t count the fact that Reagan intentionally delayed the start of tax indexing, which was part of the 1981 tax bill, until 1985 so as to capture a lot of anticipated bracket-creep for the Treasury. In fact, it was the failure of inflation to come in as fast as White House economists expected that created much of the deficit problem. I estimate that lower than expected inflation and the loss of bracket creep was responsible for about half the budget deficit in 1981 and 1982.[12] It’s also worth noting that the Tax Reform Act of 1986, which was revenue-neutral in the long run, was a fairly substantial revenue-raiser its first year, increasing taxes by $18.6 billion or 0.41 percent of GDP.[13]…

Mr. Reagan’s tax revenue philosophy was launched in California and stayed with him his entire political career.

“No amount of budget reductions, even if they had been politically palatable, could have balanced California’s budget in 1967. The cornerstone of Governor Reagan’s economic program was not the ballyhooed budget reductions but a sweeping tax package four times larger than the previous record California tax increase obtained by Governor Brown in 1959. Reagan’s proposal had the distinction of being the largest tax hike ever proposed by any governor in the history of the United States.”[1] (source: Bruce Bartlett)

I could write volumes about former Pres. Reagan, but on the tax revenue side, he makes today’s politicians not only look like pikers, but the political amateurs they are.